High-Level System Change Summary
August 1, 2017
Flawed economic and political systems force all companies to degrade the environment and society. These negative corporate impacts are increasingly financially relevant. They often return to harm companies. This pushback frequently takes the form of reputation damage, lawsuits, market rejection, and ultimately reduced profitability and shareholder returns. Evolving economic and political systems into sustainable forms (high-level system change) is essential for protecting and maximizing the well-being of business and society.
High-level system change is extremely complex. It only can be achieved through collaboration. Flawed, unintentionally destructive economic and political systems inevitably will collapse, if we do not change them first. Large companies and other collaboration participants are much better off taking a seat at the system change table and managing a beneficial, non-disruptive transition to sustainable systems, rather than suffering the consequences of inaction.
Important principles and aspects of high-level system change collaboration include the following:
Focus on desired outcome. Focus collaboration on the desired outcome or end state, such as a truly sustainable and prosperous society. Focusing on addressing specific system flaws that affect profitability could inhibit collaboration formation. Emphasizing the desired end state, while giving collaboration participants the freedom and flexibility to address specific system flaws, will facilitate collaboration.
Emulate nature. The economics of nature are essentially infinitely more sophisticated than humanity’s. Nature enables nearly all plants and animals to reach their fullest potential without inhibiting the ability of future generations to survive and prosper. The model for a sustainable economic system and human society is all around us. Emulating nature is a foundational aspect of evolving human systems into sustainable forms.
Whole system perspective. Raising our perspective from the individual to the whole system is essential for achieving high-level system change. Nature implicitly operates from a whole system perspective. All aspects are balanced and taken into account. Successful high-level system change only can be achieved by using a whole system approach that addresses and integrates all relevant issues and aspects of society.
Emphasize the rule of law. Flawed economic and political systems fail to hold companies responsible for negative impacts in many ways. This creates conflicts between business and society. It is the main overarching system flaw that compels companies to degrade the environment and society. The rule of law prohibits causing harm. Applying it involves holding companies fully responsible for negative impacts. This protects business and society.
Specific system flaws. Many economic and political system flaws fail to hold companies fully responsible for negative impacts. Examples relate to externalities, limited liability, time value of money, overemphasizing economic growth and shareholder returns, failure to adequately measure social well-being, inappropriate government influence, lack of democracy, lack of congressional and judicial term limits, media deception, public division and disempowerment, fractional reserve lending, and myopic application of economies of scale, free trade and competitive advantage. All of these system flaws are connected. Attempting to address them individually would be reductionistic and ineffective. They only can be addressed effectively through a whole system approach.
Work across the political spectrum. Differences between Republican, Democratic, Libertarian and other groups could severely inhibit high-level system change. The collaboration should aggressively work to attract divergent leaders and groups by emphasizing extensive common interests, including protecting life support systems, business and the long-term well-being of society.
Unite citizens. Citizens collectively are the most powerful force in society. But they cannot drive high-level system change when they are falsely divided by vested interests. A critical aspect of high-level system change is uniting citizens and empowering them to work together on their massive common interests.
Facilitate system change in the corporate and financial sectors. Strong investor interest compelled nearly all large companies to implement sustainability strategies. The same approach can be used to encourage companies to engage in sector-level and overarching system changes. The Total Corporate Responsibility approach provides a practical and profitable means of engaging the corporate and financial sectors in system change.
Provide accurate information. Partisan media routinely provides biased, inaccurate information. This misleads and divides citizens, which prevents them from understanding and effectively addressing their common interests. A high-level system change collaboration should emphasize providing accurate system change information to citizens and leaders.
Just begin. Due to high complexity, no individual or organization fully understands how to achieve high-level system change. The most important action early on is to form the collaboration and begin working. Necessary actions will become clear as time, attention and resources are devoted to this most important issue.
High-level system change is essential for achieving sustainability and real prosperity. System change leaders will be seen as the true sustainability pioneers and heroes of this generation. They will attain many of the same benefits as current sustainability leaders, including enhanced reputation, market share and profitability.
Frank Dixon oversaw the sustainability analysis and rating of the world’s 2,000 largest companies for many years as the Managing Director of Research at Innovest Strategic Value Advisors, formerly the largest corporate sustainability research firm in the world. Institutional investors used Innovest research to develop high-performing socially responsible investing products. Extensive corporate sustainability experience made it clear that flawed systems compel all companies to degrade the environment and society. Frank Dixon developed the TCR® approach to provide a practical and profitable way for companies and investors to engage in system change. Following Innovest, he provided sustainability and system change consulting to companies in the US and Europe. Most recently, he wrote the Global System Change series of books. Using a whole system approach, the books describe the major economic, political and social system changes needed to achieve sustainability and real prosperity.
Frank Dixon has an MBA from the Harvard Business School.
Copyright © 2017 Frank Dixon